Interviewers 914 INC.

Robert Schork: What do you think is the biggest misconception among people in the for-profit business world about the nonprofit sector?

Joseph A. Stout: That [nonprofits are] not a real business.

Alana Sweeny: That it is inefficient and that it’s not as worthy as something that is making a profit.

Alan Trager: That we don’t use the same skills to run our businesses, that all the things that make a successful business do not apply to a nonprofit, which is anything but true.

Eve Larner: We all have to be effective stewards of our missions, and that does mean using effective business practices and various systems and accountability. So we really are more of a business than meets the eye. We have to ensure continuity, ensure leadership and be innovative at the same time.

Daniel Blum: There’s a common misconception that we are less essential as an economic driver, which is anything but the case.

Sweeny: There’s a fellow who wrote a book — Adam Braun, Pencils of Promise — we had him at our nonprofit summit last year, and he talked about how it’s a misnomer to say “not-for-profit,” that we should be saying we are “for-purpose.” For example, in the business sector, if you put money in your infrastructure, that is considered being very smart; if you do that as a nonprofit, it’s considered to be overhead, and it's looked down upon.

Joanna Straub: One of the things that we talk about a lot is having a double-bottom-line in the nonprofit sector. So while you’re required to balance books financially, of course — despite the numerous challenges that are facing any kind of nonprofit fundraising or fee generation — we also are obligated as part of our mission to impact the community or make change.

Stout: Someone once said that “not-for-profit” gives the wrong impression; we are really just tax-exempt businesses. I thought that was a pretty good description.

Janet Langsam: We need to change the thinking out there, that we are “a charity.” We are service organizations.

Stout: Some of the biggest companies in the county are nonprofit.

Blum: We aligned with Northwell Health two years ago. It’s the largest private employer in New York State. It’s a $10-billion-a-year business with 61,000 employees. Not-for-profit, tax-exempt.

Langsam: The only difference [between us and for-profit businesses] really is that whatever profit we might have at the end of the day goes back into our mission and services. We’re all businesses. We live by the same rules, and we balance our budgets.

Trager: Another misconception is that because we’re mission-driven, it means salaries, benefits, and all that, get sacrificed. But at the end of the day, no money, no mission.

Schork: Is it a challenge to convince your benefactors or the outside world that in order to remain competitive and viable you have to pay salaries commensurate with the for-profit world? Or is there the assumption that because it’s a nonprofit, people should work on the cheap?

Trager: The notion is that [employees] just have to accept that they are likely going to make less than they would in the for-profit world. But the reality is there are certain functions an agency must perform for which we have to compete with the for-profit world — HR, IT, etc. [Many of us] rely on the government for most of our funding or philanthropic dollars, and they don’t always recognize that a competitive wage often entails much greater funding. So it’s a problem all the way around.

Stout: Everybody wants to give you money for a program, but nobody wants to give you money to pay the bills. But we have to pay people to do our mission. I have found that to be the biggest challenge of trying to raise funds, trying to do so in a way that people understand there is a cost to doing business.

Blum: We’re a healthcare organization, so we have our own micro-market for talent. Some of our staff have exquisite skillsets, and some of our staff members are food-service workers, or in environmental service, or engineering. Our local market here has one of the lowest unemployment rates in the country, so we’re all competing for talent,…and it’s really hard right now. As a nonprofit, a lot of [what we do] is about the people.

Trager: Eighty-two percent of our budget is salaries, and we pride ourselves on having excellent staff and providing excellent services. So when people say WJCS is terrific, they are talking about the quality of our staff. Also, [for-profit businesses like] McDonald’s can sell more hamburgers and raise more funds to increase their salaries. We have inherent limits in terms of our ability to get additional cash to pay staff. That’s an issue that makes it difficult for us to compete with the for-profit world.

Langsam: I want to echo what Joe [Stout] said about funding: People don’t want to fund general operating. When you go for a grant, it’s about the project. ArtsWestchester is one of the few organizations that does fund general operating for the arts; there is an enormous infrastructure that has to be maintained. A museum or a theater needs to be safe, secure, environmentally sound, etc.

Schork:Does the fact that we are in Westchester, one of the most expensive metropolitan areas, exacerbate the issues with respect to finding talent?

Blum: People consider physicians to be among the more highly compensated people in the community, and when I interview physicians, they express concern about living in Westchester, too, trying to find an affordable place. So it’s an issue. We’ve actually been working with some of our local municipalities to do some community planning, to figure out if there is a workforce-housing solution for nonprofits and other community organizations. [The hope is to] create a critical mass of people who might need that housing and present a value proposition to a developer and a community to build housing that would suit people who have more modest incomes.

Trager: We’re talking about the staff we employ, but we have to remember it’s not monolithic. A lot of our workforce is in very low-paid professions. For, say, social workers, who work in mental-health clinics, the salaries we offer, based on the contracts we have, make it really difficult to live in Westchester.

Amy Partridge, 914INC.: What are some of the other challenges of operating a nonprofit in Westchester County?

Trager: People tend to forget that there are huge needs in Westchester. There is this line sometimes that happens north of New York City. For example, the Robin Hood Foundation doesn’t fund Westchester; it funds New York City. And there are times when even the folks who live in Westchester County forget how much we need added resources in a lot of our communities.

Sweeny: Even people who live in Westchester who have foundations, they will fund in New York City, and nationally, but leave Westchester out of it. For example, we are doing a lot of work in Yonkers right now. You can walk over the border into the Bronx, yet there are many organizations, including those in Westchester, that will not fund those things that are going on in Yonkers. [Many of the foundations assume that in New York City] the poverty is terrible… or the graduation rates… or the reading scores. But if you take certain pockets of Westchester, they have equal troubles, yet they’re not open to the same funding opportunities that are in New York City.

Stout: That’s also the case with some of the multinational corporations [located in Westchester]. They’ll spend money around the world, but it’s hard to get money for right here.

Blum: Last year, we incurred over $10 million in bad debt, in charity-care, and millions more in in-kind care, to our community. And we don’t make that up with philanthropy. We take in a few million dollars a year in philanthropy; usually, it’s earmarked for certain projects and not uncompensated care. So our challenge is to create some margin to fund depreciation, as well as offset the things we’re doing. If we were more of a for-profit thinker, we would try to merchandise most remunerative forms of care, whether that’s in best interest of the patients or not. But as a nonprofit, we have a much different form of a mission, and today, with value-based care, we’re focusing more on prevention, health, wellness — things that [the hospital] does not get paid for. So it’s a challenge.

Langsam: Another thing I would say is looming is that the people who support our agencies are aging, and there isn’t the same sense of responsibility, generosity, in that next generation. Our challenge is in cultivating and trying to find a group of people who can succeed the last generation.

Trager: I agree it’s a challenge, but it’s more about engaging those donors in a different way. Today, people [don’t just want to donate]; they want to own the programs more; they want to direct it more; and they may want to roll up their sleeves and get involved. So they may be just as generous, but they want to do it in a different way.

Sweeny: You see so much more where people are going to the Web to check things out or making their donations to something they have a personal connection to. We also see that donors want to be engaged in other ways, like volunteering; it’s very different from 25 years ago. When you have seniors being one of the largest groups on Facebook now, you know the world is operating a bit differently. That’s a challenge for nonprofits because they may not be as well versed in some of the technological things, for example.

Schork: Obviously, you all operate in diverse fields and industries. Is there a cohesive nonprofit sector here that works together?

Langsam: I believe there is a well-crafted nonprofit community here in Westchester, where it’s balanced between health and human services and the arts and parks, etc. It seems to be a very vibrant nonprofit system, and that is encouraging.

Sweeny: That is one of the very strong things about the nonprofit community in Westchester. We partner; we do things together. For example, with United Way’s 211 helpline, we sat down with Westchester Community College because they want to be able to keep their students in school and graduating, and very often the [solutions to issues] that are keeping them from graduating [come from] other resources, outside the purview of the school. We’ve also been talking with people [in the healthcare sector] about how to work together to try to meet the needs of their clients.

Langsam: We also try to partner with some of the other human-services sectors. For example, arts and healing have become a very important aspect of hospitals and medical care today. So we’ve been partnering with many of the health organizations to bring art therapy to their patients or to bring some services for home-care.

Sweeny: Also our nonprofit community support one another. So, we have a number of training opportunities: Pro Bono Partnership does a lot of training; Nonprofit Westchester does a lot of training. We have a huge nonprofit summit, which brings about 700 people each year just for that training. They can get that cutting edge and learn to respond in a cost-effective way to the changing donor [profiles], or changing methodology, or changing government regulations, or HR regulations and systems.

Schork: How do nonprofits contribute to the economy, business community, and quality of life here in Westchester?

Straub: We did a study a couple years ago at Nonprofit Westchester, commissioned from Johns Hopkins, and one in seven people in the county worked for nonprofits. Half of that is healthcare, but the other half is human services, the arts, environmental organizations, and a variety of other services. So we’re a huge employer, a huge driver of the economy. In addition to that direct economic impact, we play this underpinning role of providing those essential services that make the community thrive. We give people the services that they need, so they can progress, maybe reach their full potential and contribute back to the community.

Blum: [Phelps Memorial Hospital] is about a quarter-billion-dollar corporation. We spend about $125 million a year on salaries. Those people have lunch, and breakfast, and dinner every day. We budgeted $33 million just this year on capital acquisitions. Those are construction jobs, technology buys, all kinds of stuff. So if you add up the small, medium, and large size of all the for-purpose providers, we’re a major economic engine in this county.

Langsam: We have an economic-development function in the county; we are part of what is lovingly called “quality of life” — what businesses and corporations count on to attract people of quality to work here. We contribute $156 million in economic impact to the county. Imagine Westchester without the arts. Imagine Westchester without all of the services provided by so many different nonprofit organizations. Without us, where would those services come from?

Sweeny: We’re really supporting business in many ways. Whether it be providing childcare when you’re at work, or eldercare, or, in the case of 211 and United Way, trying to have people not lose time at work because they’ve been connected to those resources usually offered by the nonprofit community. So, we actually are serving business at the same time we’re doing our mission work.

Larner: I think of Westchester’s nonprofits as this enormous network of intertwining relationships. We all support an enormous network that gets things done here. There’s a cyclical way we support each other. We just completed a very comprehensive report on what we call “middle-skills gaps” in Westchester. Because a number of employers — especially in some of the fastest-growing areas in the county, such as health and hospitality — have indicated they need these middle-level workers, it’s often somebody who needs work and has some degree but less than a bachelor’s. This report, funded by JPMorgan Chase, really helped us identify where those fields and specific jobs are. So we partner with business, using that kind of information to develop a new curriculum.

Sweeny: We’ve been working with business, as well in taking a look at career ladders. Because what often happens is that people, especially young people, will look and say, “I’m only qualified to do ‘X,’ and I only want to do ‘X’ for the rest of my life.” They don’t see the whole picture of where they can go. What education do you need for that [next level]? Where in Westchester can you get that education to be able to move up the ladder, into something that’s going to help you to support yourself and your family in a better way? So we’ve been working on career ladders for the health segment; we’re going to do it for technology; and we’re working on it for the nonprofit sector.

Straub: In addition to hiring all these people and having an economic impact in that way, we often run programs and services and provide them at a lower cost than a for-profit or a government entity could. We’ve gotten really good at service delivery, so we can save a lot of money. Mental-health clinics, for example: Nonprofits manage that, not the county, and they have seen significant progress.

Trager: There’s a tendency sometimes to think there are [only] certain types of people who take advantage of nonprofit agencies. Everybody in Westchester is impacted by all of us in nonprofits. Most people have a family or friend who is impacted by mental-health issues, or LGBTQ issues, or childcare issues, or someone has healthcare or school needs, etc. There’s nobody not affected by these sectors. Yet, somehow [nonprofits] fall into this perception of being some kind of an add-on, as opposed to being as embedded in the fabric of our society as any other sector.

Langsam: We’re essential.

Trager: Yes, we’re essential providers and businesses in the county, and we make our county richer, more vibrant; we make Westchester what it is. The notion of what Westchester would be without us is inconceivable.

Langsam: Since 1995, the economic impact of the arts in Westchester has grown 189 percent. That’s because people go out to a show or a movie at the [Jacob] Burns [Film Center] or whatever. They go out to dinner and are spending at local restaurants. It’s a very integrated activity, and it boosts tourism. Also, [our efforts are] keeping residents in Westchester, spending their entertainment dollars here.

Trager: We’re a community-based organization, with 750 to 800 employees; a $40 million agency, 82 percent of it spent on staff. That’s a lot of money going into the community. And in terms of [the number of] people we impact, it’s like 20,000, but I’ll bet if you add up everyone around this table, we’re talking a six-figure impact.

Larner: At WCC, we have between 12,000 and 13,000 students studying every year, and that’s just our for-credit population. When you think about the delivery of education, we supply scholarships to students, [and those scholarships] are the difference between getting a higher education or not. We’ve conducted a study in the past indicating that most of our graduates stay in Westchester: They live and work here. So without the opportunity to advance themselves through education, think how much poorer our county would be, in many different ways.

Langsam: There’s one other piece that has not been mentioned, and that’s revitalization of neighborhoods. One of the important things the arts do is go into neighborhoods where the housing stock is perhaps deteriorating. It isn’t just the arts; often, in a marginal community, the nonprofit is the one that stays there, continues to offer services, continues to build community spirit, etc.

Trager: I’m thinking about how important we are to the county, and I would argue that [adequately funding nonprofits] is both the right thing to do and the financially wise thing to do. Funders need to recognize us and adequately fund us and pay for the salaries we need, the infrastructure we need, the administrative overhead we need. Our funders, particularly the government, need to recognize that and step up.

Partridge: How well is that support coming back to you, from both the business community and the county government?

Blum: I think they care, both the elected officials and those in private business. But to a certain extent we are taken for granted, and there is this assumption we’ll figure it out. We’ll make it work. But there is a fragility to what we do. There comes a point when you can’t figure it out anymore; that’s why three hospitals within the last decade have closed in this county alone. Adding value to people’s lives is a common element of everybody’s mission here. But it needs to be underwritten somehow. For example, we do about 300,000 ambulatory encounters; some of those are simple blood tests. If no one is paying for your blood test, we still take your blood. We do the same test as somebody who is highly insured. The same is true of everybody here, so there needs to be a rational, consistent funding methodology to ensure these services are offered.

Straub: I agree there is a lot of support for nonprofits and the work we do here. But the challenge [on the government-funding side] is when you’re the elected official whose constituents are railing about property taxes.... It’s very complex. Everyone wants to do right, and what we’re trying to do is get all the people at the table, to figure out how we do right by everyone in the community.

Langsam: [Regarding] support from the community and the corporate community, it isn’t just about funding. There is some moral support we’d like to have, too, speaking out on our behalf, understanding the importance of what we do.

Blum: There’s also a lot to be very grateful for in Westchester. We’ve all found that there are people in this community who really make a difference. Individually, they step up to the plate; they’re charitable and giving, engaged and concerned, sincere. They want to see good things happen. We have about 180 volunteers, who commit themselves regularly to providing services within the hospital. So, we are really blessed in this community to have people who are willing to put themselves out there to give their time and make a difference.

Trager: I couldn’t agree more. If we ended this conversation on a negative note, we’d have misrepresented ourselves. As someone who’s been at my agency for a long time, we’ve benefited incredibly from the human spirit of Westchester. In so many ways, they have enriched our agency and, as a result, the county.